The FHA stands for Federal Housing Administration and it was developed after the great depression when the banking system was restructured. The purpose was to regulate the mortgage industry, including the terms and interest rates people are charged. In general, they make it easier for people to obtain a home loan.

An FHA loan or mortgage is a loan that’s insured against default by the FHA. This means the FHA guarantees the lender that they will get their money even if you the borrower are unable to pay it back – in other words if you default. This guarantee means lenders are more willing to loan people money to buy homes, thus making it easier to purchase a home.

How does the FHA make this guarantee? They charge lenders a fee – both an upfront fee and a small monthly fee to cover their costs. The fee is called a mortgage insurance premium or MIP.

While an FHA loan may be right for some, it does come with some strings that some people are not interested in.

If you’re looking for a home, it pays to investigate FHA loans in your area. Find out how much of a home you can get in your area. If you’re willing to pay the MIP and you have an average credit rating, and the loan meets your home needs, it can be a great option. This is particularly true for first time home buyers or home buyers who have less than stellar credit.

Two of those options are credit counseling and getting a debt consolidation loan. With credit counseling, a third party negotiates lower payments and interest rates for you. You then start making one monthly payment to the credit counselor, and he forwards the monthly payments to your creditors on your behalf. With a debt consolidation loan, you simply take out a loan, use the proceeds to pay off your existing debts, and then repay the loan.

Both of these methods can help you successfully repay your debts. Which one is best for you depends on your unique circumstances. Here is some advice on the pros and cons of credit counseling as opposed to debt consolidation loans to consider.

Pros

Cons

Credit counseling and debt consolidation are both viable options for those who are in too much debt. But either way you go, it’s crucial to carefully consider your options and check out any agency or lender you choose to work with. Doing so will help ensure that you make the right choice and don’t get burned.

When you’re juggling debts from several different creditors, it can be difficult to keep up. It’s often hard to scrape up enough money to pay the minimum payment every month, let alone put any extra funds toward paying your debts off. If this situation sounds frighteningly familiar, perhaps you could benefit from a debt consolidation loan.

Consolidation loans are simply loans that are taken out to pay off several other debts. They’re often used to bring together the balances of several credit cards, but the proceeds may be put toward other debts as well. There are several benefits to getting a debt consolidation loan:

Debt consolidation can take on a number of forms. One of the most common types of debt consolidation loan is the home equity loan. Homeowners can borrow against the equity they have in their homes and use the proceeds to pay off high-interest debts. A home equity loan usually has low interest, and it can even save you money on your taxes since you can deduct the interest.

If your credit is in decent shape, you might qualify for a signature loan to pay off your debts. These types of loans have higher interest than a home equity loan, but it may still be lower than the interest you’re paying on your credit cards. When considering this type of loan, it’s important to shop around, because interest rates and terms vary significantly.

Another way to consolidate debt is by getting another credit card that has a low interest rate and transferring your balances. Some cards offer a zero percent introductory rate that lasts 6 to 12 months, while others offer a low balance transfer rate that lasts longer.

Consolidating your debt can make your life simpler and save you lots of money. But it’s crucial that you don’t take the opportunity to run up more debt. If you do use the cards you’ve paid off, pay the balance in full every month. That way you won’t have to go through the same thing all over again.

Following this advice will make your life much easier, not to mention less expensive. But not everyone follows it to the letter. Some charge a little more and a little more until they’re in debt over their heads. Others are very careful to keep their debt at a manageable level, but they end up losing their jobs or having other financial difficulties. Either way, they might eventually find themselves unable to keep up with even their minimum payments.

Some who are unable to make their payments hide from their lenders, screening phone calls and tossing the notices they send in the trash. Others are quick to consider bankruptcy. But neither of these is a good first reaction. In most cases, you could save yourself a lot of headaches by just talking to the lender.

Lenders would prefer for you to pay your obligation in full rather than skip out on it. So if you let them know that you’re having problems, they are often quite willing to work with you. They might let you skip a payment, or they could lower your interest and/or monthly payment. They aren’t obligated to do such things, but it’s certainly worth a try.

The best time to talk to the lender is as soon as you realize that you’re going to be late with a payment. This will let them know that you’re serious about paying your debt, and that they’re not wasting their time by working with you. Here are some tips for the big talk.

No one likes to admit that they can’t make their debt payments. But it can happen to anyone. By being straightforward with the lender, you have a much better chance of working out something that’s agreeable to everyone involved.

Loan modification options are a means by which one or more of the terms of a mortgage loan are permanently changed. This allows the loan to be adapted to enable the borrower to maintain their loan and make payments they can afford.

Some home lending and financial experts consider loan modifications to be a win-win situation. This is particularly true for those in the following situations:

Banks or lending institutions may consider any of the following loan modification options:

They can extend the length of your term, meaning they can stretch the loan by adding an additional 10 years to the loan. This would cause the payments to be adjusted and should bring them down to a reasonable amount.

They can also lower your interest rate. By reducing the interest rate, you’ll also reduce the payment which could help you catch up as well as afford the new payments.

Another option would be to change the loan from an adjustable rate mortgage to a fixed rate mortgage. This means instead of your payment fluctuating with the national prime rate, you would have one interest rate for the duration of the loan.

They may choose to reduce your loan balance, also called a Short Refinance. This option is used by financial institutions to forgive the difference of principal balance owed above what the home is worth, which enables you to refinance your loan at current rates.

Deed in Lieu of Foreclosure is another loan modification option. With this option the lender chooses to accept the house back on a particular date rather than foreclosing on the house. Some lenders will help homeowners in this situation relocate to a new home by helping with expenses.

Forbearance is the last loan modification option, which may see the lender offering to let the borrower skip one or more payments without penalty, or make partial payments for a specific length of time.

All of the above loan modification options can seem like a miracle for homeowners who have fallen on hard times. After having one of these options applied to their own situation, expect to be able to breathe a sigh of relief. If this a loan modification option sounds like it would help you, talk with your mortgage holder to see what options are available for your situation.

But if you have a plan, getting out of debt doesn’t have to be too painful. Many of these items are very easy to do. You just need to focus some time and energy to help with your situation. Here are ten things you can do to pay off those bills quickly.

1. Sell your unwanted stuff. Most of us have a lot of things just sitting around collecting dust. Many of these items are worth at least a little bit of money, and some may be worth quite a bit. Put them in the paper, have a yard sale or sell them on eBay. Then put every penny that you make toward paying off your debt. This won’t bring you ongoing funds to pay off your debt with, but it will help you put a dent in it and avoid some interest.

2. Start a side business. Even those who work full time can usually find the time to participate in some money-making activities after work or on the weekends. Do some babysitting, detail cars or make crafts and sell them. These activities can generate money to put toward your debt until it is paid in full without the pressures of working a second job.

3. Make money online. You can do so in a number of ways, including taking surveys, blogging or providing services. Use the money you make to pay off your debts.

4. Rework your budget. We can all find room for improvement. Even small items such as that daily cup of coffee on the way to work can make an impact. Cut the fat and put the money you save toward your debts.

5. Sell your car. If your car payment is a burden, selling it and buying something more affordable will leave more money in the budget (and more to pay off other debts).

6. Snowball it. This method involves paying as much as possible toward your largest debt until it’s paid off, and in the meantime making only minimum payments on everything else. When the first debt is paid in full, apply the amount you were paying on it to the next smallest debt in addition to its minimum payment. Keep doing this until your debts are all paid.

7. Consolidate your debts. If you have a lot of high-interest debt, consider transferring the balance to a low- or no-interest credit card. This will give you one monthly payment instead of many and lower your minimum payment and interest. But you still need to pay as much as possible each month to achieve maximum savings.

8. Pay bills weekly or biweekly. If you get paid every week, send in ¼ of the payment each week. If you get paid every other week, send ½ each time you get paid. This could save you interest, and you’ll end up making an extra monthly payment each year.

9. Negotiate with your creditors. If you’re having trouble making your payments, some will offer lower interest rates and reduced minimums.

10. Talk to a credit counselor. They will negotiate with your creditors on your behalf, and can often get deals that creditors won’t offer directly to debtors. When it’s all said and done, you can make one monthly payment to the credit counseling agency and they will forward payment to your creditors. With their plan, you could be debt free in a fraction of the time it would otherwise take.

If you have good credit, you may be asked to co-sign for a loan at some point. Perhaps your child needs to borrow money to buy her own car but has never had any credit in her name. Or maybe your cousin is recently divorced and needs to borrow money to make a new start. Whatever the reason may be, it’s important to know the potential consequences of co-signing for a loan before you go through with it.

Co-signing subjects you to a number of risks, including the following:

Co-signing a loan for anyone is risky business. Lenders require a co-signer because they do not believe that the borrower will repay the loan, and in many cases, they’re right. Before you sign on the dotted line, think about the ramifications. You might be helping someone you care about in the short term, but it could seriously damage your relationship (and your credit record) in the long term.

Surprisingly few consumers know that debts are subject to a statute of limitations. This means that creditors and debt collectors have a certain time limit to collect the debt or sue. If this time limit lapses, they no longer have a case against the debtor. They can attempt to collect or even file suit, but if you use the statute of limitations as a defense, they will not prevail.

How Long Is the Statute of Limitations?

The statute of limitations varies according to the type of debt and the state. It may be as short as two years or as long as fifteen. Most states have different statutes for oral agreements, written contracts, promissory notes and open accounts.

Auto and installment loans are considered written contracts. Credit card debt most often falls under the open accounts category. But in certain instances, such as when the credit card was secured with a written agreement, it is considered a written contract. This is often a matter for the court to decide if there is any doubt.

When Does the Statute of Limitations Begin?

When the statute of limitations begins is a matter of some debate. Some say that it begins on the date of your first delinquency. Others claim that it begins when the creditor sends a demand letter, when the last payment was made or when the debt was written off.

In general, the statute of limitations begins when the creditor has a cause of action. This means different things according to the credit agreement. In some instances, this occurs when the creditor demands payment in full. In others, it occurs when you become delinquent on a debt. If you’re unsure, a consumer rights attorney can help you determine when the statute of limitation starts.

It’s important to note that the statute of limitations can be restarted under certain circumstances. This may occur if you use the account again. It may also occur if you make a partial payment or agree to a payment arrangement. If a creditor contacts you, you can protect yourself by refusing to acknowledge that you owe the debt or make any kind of payment or agreement. Simply state that the statute of limitations has expired. They will probably either leave you alone or take you to court, where you can defend yourself in the same manner.

The fact that a debt still appears on your credit report doesn’t change the fact that the statute of limitations may be up. Knowing the law in your state could save you from paying a debt that cannot be collected. For more information, contact a consumer rights lawyer.

In a perfect world, everyone would use credit wisely and pay off balances within a month or two. But in reality, cardholders often build up a mountain of debt and fail to realize it until it’s unmanageable. That’s when it’s time to put the plastic away and work on paying off the balance. Here are some tips to help you do that.

1. Rework your budget, eliminating unnecessary items. Even little things like that cup of coffee you buy on the way to work every morning can add up. Once you’ve decided what you can do without, add up how much you’ll save and add it to your monthly payment.

2. Volunteer for overtime, or get a second job. Put all the extra money you make toward your balance.

3. Reduce your overall interest rate. If you have a low interest card that allows balance transfers, transfer the balance of a higher interest card to it. Even if you can only transfer part of the balance, you will save some money and be able to pay everything off more quickly.

4. Put lump sums of money that you receive toward your credit cards. These may include tax refunds, bonuses or settlement proceeds. This can save you a lot of money in interest.

5. Put your raises toward paying down your debt. A raise is money that you were living without before, so you should be able to continue to live without it until you’ve paid off your credit cards.

6. Sell stuff. Get rid of that extra vehicle, or have a garage sale. We all have things sitting around that we could do without, and those things can make us money. Use the extra cash to help pay off your credit card debt.

7. Snowball your debt. This simply means paying the minimum payment on all but one card, and paying as much as possible toward that one until it’s paid off. Then you move on to another card, paying the minimum payment plus what you were paying toward the previous one. Repeat until all balances are paid in full.

8. Get help from friends and family. A loan from someone who is close to you can help you get out of debt, and repayment terms are usually much more favorable. But it’s still important to have a repayment agreement and follow it carefully.

9. Negotiate with your creditors. If you’re having a hard time paying off your balance, they might be willing to lower your interest rate. You may be required to stop using your card while the lower rate is in effect, but a moratorium on charging until your finances are in better shape is a good idea anyway.

10. Talk to a credit counselor. If you are several thousand dollars in debt and can’t afford your payments, credit counseling could save you from bankruptcy. A credit counselor will negotiate with creditors on your behalf, and can usually get you lower interest rates and reduced payments. Once it’s all set up, you make one monthly payment to the credit counseling agency, and they forward the appropriate amount to each creditor.

Sometimes people end up with more debt than they can handle. Often it is not due to irresponsibility, but to circumstances beyond one’s control. Job loss, unexpected medical expenses and other such situations can cause finances to take a sudden turn for the worse. When such things happen, bankruptcy can ease the financial burden.

Bankruptcy should only be used when all other alternatives have been exhausted. It remains on your credit record for ten years, making it difficult or impossible to obtain loans and other types of credit. But in some cases, it is a debtor’s only hope for relief. If you’re considering bankruptcy, it’s important to know which type is best for your situation.

Chapter 7

Chapter 7 is the most common type of bankruptcy for individuals. It requires the debtor to turn all non-exempt property over to a trustee. The trustee then liquidates the property, distributing the proceeds to creditors to lower the debt. The remainder of the debt is usually discharged, as long as it doesn’t fall into categories that are ineligible for discharge.

Those filing for Chapter 7 bankruptcy must pass a means test to show that they are unable to repay their debts. Generally, they must have a total income below the mean income for their family size in their state. Those who do not qualify for Chapter 7 usually qualify for Chapter 13.

Chapter 11

Most Chapter 11 bankruptcies are filed by businesses, but individuals are also eligible for this type of bankruptcy. This type of bankruptcy is costly and complicated, and is only appropriate for individuals under certain circumstances that involve large amounts of debt and assets.

In Chapter 11 bankruptcy, the business (if applicable) may continue to operate. A repayment plan must be written and approved by creditors and the bankruptcy court. A trustee is not appointed unless there has been some sort of wrongdoing by the filing party.

Chapter 13

Chapter 13 bankruptcy is the second most common type of bankruptcy filed by individuals. In order to qualify, debtors must have an adequate amount of disposable income and their debt must fall below limits set each year.

Instead of turning over assets and having the debt remaining after their liquidation discharged, the debtor proposes a repayment plan in which he will repay creditors over a period of three to five years. Creditors may object to the payment plan, but the bankruptcy court has the final say as to whether it is accepted. The debtor is allowed to keep his property, and he pays creditors a reduced amount.

Bankruptcy is not something to be taken likely, but sometimes it is necessary to help debtors get a fresh start. A bankruptcy attorney can help determine whether you should file, and if so which type of bankruptcy is appropriate for your situation.